Venmo, PayPal, and Cash App will now have to report transactions totaling more than $600 to the IRS as Biden plans to ramp up financial enforcement.
The new reporting requirement will ensure that small businesses that receive payments through those apps are paying their fair share in taxes on them.
Beginning Jan. 1, 2022, third-party payment processors were required to report such transactions.
The changes will be included during the 2022 tax season.
The payment apps were previously required to send users 1099-K forms if their gross income exceeded $20,000 or had more than 200 transactions per year.
President Biden’s IRS is cracking down on payments made through third-party apps, requiring platforms like Venmo, PayPal, and Cash App to report transactions if they exceed $600 in one year.
The new reporting requirement will ensure that small businesses that receive payments through those apps are paying their “fair share” in taxes on them.
Businesses were always required to self-report such incomes to the IRS, many often did not keep a record of their smaller transactions.
The payment apps were previously required to send users 1099-K forms if their gross income exceeded $20,000 or they had more than 200 transactions per year.
The new tax law was part of the March 2021 American Rescue Plan, which passed with no Republican votes.
The new rule is only for goods and services transactions, not personal (allegedly), such as paying a roommate for rent or reimbursing a friend. It also excludes anyone selling a personal item at a loss, such as a couch bought for $700 and sold for $650.
The cash apps will now be required to send the 1099-K form to businesses with electronic transactions greater than $600. The new change will apply for the 2022 tax season.
‘For the 2022 tax year, you should consider the amounts shown on your 1099-K when calculating gross receipts for your income tax return,’ PayPal warned on its website. ‘The IRS will be able to cross-reference both our report and yours.’
Republicans have said that that proposal amounts to the Biden administration peering into Americans’ everyday purchases.
This appears to be aimed at middle class/working class businesses over small amounts of money.
White House Spokesperson Jen Psaki and Treasury Secretary Janet Yellen claimed they implemented this policy to “capture transactions by billionaires that slip through the cracks” and are not reported on their taxes.
Why would you go after accounts on PayPal with $600 to catch billionaires? There are far better ways to track billionaires.
Yellen lied a few months back and claimed, “it’s just metadata.” We heard that one before.
PayPal told their users:
You may notice that in the coming months we will ask you for your tax information, like a social security number or tax ID, if you haven’t provided it to us already, in order to continue using your account to accept payments for the sale of goods and services transactions and to ensure there aren’t any issues when these changes take effect in 2022.
Democrats also want digital currency so they can track your every move. You want to buy a gun or ammo? They got you!
That’s why we will have nearly 90,000 new IRS agents.